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The administration of President Benigno S. Aquino III aims to implement stable economic policies, substantially reduce red tape and level the playing field. It is of the belief that government is an enabler and not an impediment to business. Its “Daylight” strategy is to move forward, in unison, in broad daylight where business transactions are clear, swift and transparent. Transparency takes precedence to ensure a level playing field.It is the Aquino administration's thrust during its six-year term to reach for high growth, providing equal opportunities to Filipinos and foreigners alike, with an annual average of 7 to 8% from 2011 to 2016. This means more jobs and new opportunities to improve employment and, in the process, reduce poverty incidence.

Resilient and Fast-Growing Economy

The Philippines, one of the few countries that avoided a recession in 2009, grew 6.6% in 2012, the highest in Southeast Asia, at an average of 6% the last three years. Healthy economic growth is expected to be sustained with growth rates of 7-10% possible in the next 10 years. Better conditions in the global economy and economic outperformance in the Philippines’ key export markets in North Asia, which make up 36% of total exports, and ASEAN, at 16% of total exports, should pave the way for sustainable growth performance. The structure of the Philippine economy is similar to those of advanced economies, with consumption accounting for more than 70% of gross domestic product, a structure that investment-led economies are trying to emulate.

The Philippines’ recent investment grade status is a resounding vote of confidence affirming the Philippines’ strong economic and fiscal gains demonstrated by the following:

On 27 March 2013, the Fitch group announced that they upgraded the status of the Philippines from BB+ to BBB-.

On 2 May 2013, Standard & Poor’s also upgraded the country’s sovereign long-term foreign currency rating from “BB+” to “BBB-“ with stable outlook.

On 7 May 2013, the Japan Credit Rating Ltd. revised its credit for the Philippines to BBB- from BB+, up one notch. The rating has a stable outlook.

Growth Drivers and Risks and Challenges to Growth

The Aquino Administration’s thrust to improve governance and the implementation of right policies are providing impetus for high sustained economic growth.

Supply Side: Agriculture, fishery and forestry are expected to benefit from the government’s modernization program. Expansion in mining, acceleration in construction and full recovery of housing, biofuels and the Halal food market are anticipated. Services are expected to continually improve driven by retail trade, finance and private services.

Demand Side: Foreign remittances are expected to provide momentum for increase in household spending. The government’s total budget for 2013 is P2.006-trillion, increased by 10.5 % from last year’s budget. The cumulative investment outlook of all investment promotion agencies are at PhP3.8 trillion from 2011 to 2016. Boost from construction, agro-industry, electronics and semiconductors, tourism and business process outsourcing are also anticipated. Total export forecast are 13% year-on-year growth target for 2011 to 2013, and will increase to 14% for 2014 to 2016. For 2016, targets for merchandise and services exports are expected to reach US$ 92 billion and US$ 25 billion, respectively.

Risks and Challenges to Growth: There is uncertainty of external demand brought on by a slow recovery scenario for global growth in the USA and other advanced economies. Surge in large capital inflows could pose challenges to liquidity and exchange rate management. Commodity price pressures threaten the strong recovery of private demand and large capital inflows. Increases in toll and transport fare in the short term, petitions for cost recovery in electricity prices, and wage hikes could exert domestic price. Natural calamities, a known fact in the Philippines, may dampen economic growth. As well, there may be narrowing global sources of investments resulting from the protracted resolution of European debt crisis.

A Clear Political Commitment to Fiscal Sustainability

The Aquino administration has made fiscal sustainability a top priority. The administration has a clear fiscal strategy for the medium term, which includes the following: a stringent tax enforcement to achieve national government tax effort of 18.1% by 2016; tight expenditure discipline to use public resources in the most efficient manner; sustainable deficits and healthy public finances; and prudent debt management.

The administration’s commitment to enforce tax collection is paying dividends:

The Philippines was removed from the Organisation for Economic Cooperation and Development (OECD) tax haven “grey list”, a recognition that it is now compliant with accepted tax standards.

The country also received a US$434million Millennium Challenge Corporation grant to provide additional funding for tax administration efforts and other initiatives such as infrastructure.

The Philippines contained the damage of the global financial crisis with respect to its fiscal accounts; deficits are manageable and debt level is sustainable. Proactive debt management reduced rollover risk and increased debt carrying capacity while minimizing foreign exchange risk and increasing self-sufficiency of funding.

Fortified External Position and a Sound Banking System

Over the last decade, the Philippines has transformed itself into a country with sustained structural current account surpluses and rapid reserve accumulation. Gross international reserves expanded to a record high of US$ 84.25 billion in 2012. This large stockpile of international reserves provides a healthy buffer against external shocks—reserve holdings can cover close to 11x the country’s short-term external debt on original maturity.

Remittances continue to contribute greatly to the Philippine current account (remittance data for November 2012 pushed the total amount sent home by overseas workers in the first 11 months of last year to $19.416 billion, up 6% from $18.317 billion recorded in the same period in 2011). This exceeded the Central Bank’s remittance growth forecast of 5% for 2012. The Philippines’ banking system is sound, characterized by low NPLs (non-performing loans) and very strong prudential ratios.

Ensuring Enabling Business Environment Reforms

The administration aims to make the business environment ever more predictable, reliable and efficient, thereby improving the country’s international competitiveness to attract more investments. Among the focus areas are entrepreneurship and infrastructure development. In particular, it is important to ensure ease of doing business and improve infrastructure through enhanced implementation of the Public-Private Partnership (PPP) Programs.

Ease of Doing Business

DTI aims to streamline and simplify business registration requirements and procedures in the country. The Business Name Registration System (BNRS) drastically reduced business name registration time to within 15 minutes. The Philippine Business Registry (PBR), a web-based information technology system, aims to enable applicants to automatically obtain numbers from four other agencies: Bureau of Internal Revenue (BIR), Social Security System (SSS), Home Mutual Development Fund (Pag-Ibig Fund) and Philippine Health Insurance Corporation (Philhealth). The Business Permits and Licensing System (BPLS) is reformed at the local government level to improve the business permits and licensing systems of Local Government Units (LGUs) and reducing the steps, time, and signatories involved by adopting a unified business application form.

Public-Private Partnerships: Cornerstone Strategy of National Development

PPP programs help provide the foundations for growth. Infrastructure support facilities for tourism, agriculture, social services and growth centers are among the emphases of the Aquino administration. Incentives to stimulate private resources, ensuring competition, fairness and transparency, providing assistance in business feasibility, and a fast-track project approval process, eliminate much of the guesswork in the business process. Eight (8) projects were rolled out in 2012. Seventeen (17) are in the pipeline and twenty-one (21) are under development for 2013.

For more information on the Aquino administration's proposition for growth and opportunity in business, contact any of the Philippine trade offices in the United States:

Ten Philippine Missions throughout the US offer consular services. Each Mission covers a specific geographic region. To find out which Mission can assist you, what the hours of operation are and how to reach it please use our interactive Consulate Finder.